Hey everyone, welcome back to the course.
So after going through the introduction of the blockchain and also learning about the history of the
blockchain, let's go into the key characteristics of the blockchain.
These key characteristics of blockchain makes blockchain employable for multiple industries and sectors,
and these are some of the desirable features for the blockchain to.
So the first key characteristic for blockchain is cryptography.
Blockchain is thoroughly based on cryptography.
Blockchain uses public key cryptography to secure the ledger.
Once you go on to create an account with the blockchain, you are going to use the public key cryptography,
which is also known as asymmetric cryptography.
You will be generated with a private key and a public address.
Private key is derived from the private key, which is generated with the asymmetric cryptography,
and the public address is derived from the public key.
The private key is the major entity, which is kind of like your signature on top of blockchain.
So any transaction you are going to send, you are going to use private key to encrypt that transaction.
And public address is more of like your account ID on blockchain.
So anything you are going to receive is to be received through the public address.
The main objectives performed by the blockchain with cryptography includes the securing of the transactions
and also it makes sure that the transactions or data are not tampered inside the network.
The second key characteristics for blockchain is immutability.
Immutability in blockchain means that once the data is been agreed upon and stored on top of the blockchain,
it cannot be modified with any centralized database.
We are subject to hacking and we require third party dependencies to keep the data secure.
If you want your emails to be secure, you are trusting Google.
If you want your cloud data to be secure, you are trusting Dropbox.
But with blockchain we are making sure that we don't require third party dependencies.
We will store the data immutably once it has been agreed upon by all the users inside the network.
Moreover, blockchain is a never ending state of forward momentum, which means that blockchain stores
every data in immutable fashion, and it also maintains the history of all the immutable data.
That's why if you see in the case of Bitcoin, you can still track back to the first transaction, which
was initiated by Satoshi Nakamoto back in 2009.
With blockchain, the immutability also means that you are now able to maintain the provenance of the
assets.
For example, if you are performing a patents based system, then you can easily maintain the provenance
of the patents on top of the blockchain network.
So once a patent has been filed, it will be immutably stored on top of the blockchain.
If somebody else tries to file the same patent, you can verify from the blockchain that it has already
been filed and stored on top of the network.
So in this way, Immutability plays a big role within the blockchain world.
The next important key characteristic for blockchain is a peer to peer network.
A peer to peer network is defined where people or computers directly connect with each other without
holding any third party services between them.
A peer can be defined as a computing resource, such as a disk, storage, processing power or network
bandwidth, which is directly shared with other participants without any central coordination by server
or stable host peers inside.
Blockchain can be maintained in a way where they will provide services like mining or just making sure
that the data is available all the time.
The trust inside a peer to peer network is built by the participants itself.
Moreover, if you are looking for more power and more performance through the distributed network,
then you can join in more nodes to achieve the same peer to peer network is an important characteristic
of blockchain as it maintains the whole network system where people and devices are connected to each
other to share data or transactions.
The next important characteristic for blockchain is a distributed network.
A distributed network is a database which is held and updated independently by each participant in a
large network.
Let's say if you have 100 computers connected inside a network, then all those 100 computers will store
the same data and will update the information as it is being updated on a single machine.
So which means that if Computer One creates a new transaction and updates the data, the same data will
be shared with the other 99 computers who will update the same data at their end.
Inside a distributed system, the records are not communicated by a central authority, but instead
we employ different kinds of networking protocols like gossip protocols, which makes sure that we are
able to share the data between different computers.
In case of blockchain, the distributed network is maintained in a way where each single node verifies
the new transaction, which is coming in.
Once they verify the new transaction and come to their own conclusion, they provide a vote based on
top of those conclusions.
This voting makes sure that the majority of the participants or computers agree and converge to a single
point of truth.
All the nodes inside the distributed network will maintain their own identical copy of the ledger or
the data which is shared across the system.
So these are some of the key characteristics which makes blockchain very desirable for industries.
People are continuously trying to create much more effective solutions using blockchain, but to create
those effective solutions first, you need to have a basic understanding of what different blockchain
fundamentals are.
So in the next lecture, we are going to go through the blockchain architecture fundamentals.
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